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UAE’s LuLu Group launches 25% stake IPO on ADX, targeting up to $1.8bn

LuLu Group is launching a three-tranche IPO, offering 25% of its stake on the Abu Dhabi Securities Exchange starting 28 October 2024. The retail giant aims to raise between $1.7 and $1.8 billion, with plans to allocate shares to employees and pay a 75% dividend on annual profits.

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ABU DHABI (The Thursday Times) — LuLu Group, one of the UAE’s largest retail conglomerates, has unveiled plans to sell 2.58 billion shares, representing 25% of its stake, through an initial public offering (IPO). The three-tranche IPO will open on 28 October 2024 and is expected to close on 25 November 2024. The shares will be listed on the Abu Dhabi Securities Exchange (ADX), with the final offering price to be announced on 6 November 2024. The group aims to begin trading its shares on ADX by 14 November.

This move marks a significant milestone for LuLu, positioning the retail giant for further growth and expansion across its key markets in the GCC, Egypt, the Far East, and India. The IPO is expected to attract substantial interest, given LuLu’s established presence in the retail sector and its role as a major player in the region’s economy.

Share allocation and dividend plans

As part of the IPO, a portion of the shares will be allocated to LuLu Group’s employees, giving them the opportunity to invest in the company’s growth. Additionally, LuLu has outlined plans to maintain a dividend pay-out ratio of 75% of annual distributable profits after tax. This dividend will be paid on a semi-annual basis, providing an attractive return to investors. The group is targeting its first dividend payout for the six months ending 31 December 2024, which will be distributed in the first half of 2025.

Financial advisors and lead managers

The IPO is being supported by a consortium of prominent financial institutions. Emirates NBD Capital, HSBC Holdings, Abu Dhabi Commercial Bank, and Citigroup are serving as joint bookrunners for the offering. Moelis & Co. has been appointed as the group’s financial advisor, ensuring a smooth and strategic listing process. Furthermore, the joint lead managers for the IPO include Abu Dhabi Commercial Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC Bank Middle East, and EFG Hermes, while FAB and ADCB are acting as joint lead receiving banks.

LuLu Group’s expansion strategy and growth

LuLu Group, founded by Yussuff Ali in the 1990s and headquartered in Abu Dhabi, has expanded significantly across the Middle East and Asia. The group operates hypermarkets, supermarkets, and shopping malls across the GCC, Egypt, the Far East, and India. In 2020, UAE sovereign investor ADQ purchased a 20% stake in LuLu, valued at over $1 billion, supporting the group’s expansion efforts, particularly in Egypt. This strategic investment has further strengthened LuLu’s position as a leading retail player in the region.

The IPO comes as part of a broader trend of significant public listings in Abu Dhabi this year. Following the success of other companies such as NMDC Energy, Alef Education Holding Plc, and ADNH Catering, LuLu’s IPO is poised to be one of the most anticipated public offerings of 2024. The retail giant is reportedly aiming to raise between $1.7 billion and $1.8 billion through the IPO, with these funds expected to fuel its continued growth and expansion across new and existing markets.

Strong outlook for Abu Dhabi’s IPO market

LuLu’s decision to go public in Abu Dhabi reflects the growing strength of the UAE’s capital markets. With a string of successful IPOs in 2024, including NMDC Energy and Alef Education, Abu Dhabi’s financial market is increasingly becoming a hub for high-profile listings. The ADX has established itself as a key platform for companies looking to raise capital and expand their reach. As LuLu’s IPO nears, investor interest is expected to surge, contributing to the robust momentum in the UAE’s IPO landscape.

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